Human Resource Planning

Human Resource Planning

Process of anticipating and making provision
for the movement (flow) of people into,
within, and out of an organization.
Planning so that the organization has the
right number of people, right kind of
people, at the right time, in the right place.

Is the first component of HRM strategy

All other functional HR activities are derived from and
flow out of the HRP process.
Has its basis in considerations of future HR
requirements in light of present HR capabilities and
capacities.
Is proactive in anticipating and preparing flexible
responses to changing HR requirements.
Has both an internal and external focus.

HR Planning Issues
Staffing Questions:
How do we manage staffing in times of recession or
expansion?
What impact does technology change, mergers or
relocation have on staffing issues?
Do we always have the right people in the right jobs
at the right time?
How do we get our human resources: buy them or
make them or both?

Why is HRP important?

Helps in organisational expansion & diversification

Prevent overstaffing and understaffing

Ensure responsiveness to change

Lead time in Training & Development

Ensures that right skills & right number of people are

in place

Reduces HR costs

External Environment

Strategic Planning
Internal Environment

Human Resource
Planning

Forecasting
Human
Resource
Requirements

Demand =
Supply
No Action

Comparing
Reqts and
Availability

Surplus of
Workers
Restricted Hiring,
Reduced Hours,
Early Retirement,
Layoffs,
Downsizing

Forecasting
Human Resource
Availability

Shortage of
Workers
Recruitment
Selection

Human Resource Planning Model

FORECASTING
FORECASTINGDEMAND
DEMAND

Considerations
Considerations

Techniques
Techniques

Technology
Trend
Technology
Trendanalysis
analysis
Financial
Financialresources
resources Managerial
Managerial
estimates
Organizational
Organizationalgrowth
growth estimates
Delphi
Mgmt.
Delphitechnique
technique
Mgmt.philosophy
philosophy

Techniques
Techniques

HR
HRinventories
inventories
Markov
Markovanalysis
analysis
Skill
Skillinventories
inventories
Replacement
Replacementcharts
charts
Succession
SuccessionPlanning
Planning

External
External
Considerations
Considerations

Wkforce
Wkforcechanges
changes
Mobility
Mobility
Govt
Govtpolicies
policies
Unemployment
Unemployment

FORECASTING
FORECASTINGSUPPLY
SUPPLY

BALANCING
BALANCING
SUPPLY
SUPPLYAND
AND
DEMAND
DEMAND

(Shortage)
(Shortage)
Recruitment
Recruitment

Full-time
Full-time//Part-time
Part-time

(Surplus)
(Surplus)
Reductions
Reductions

Layoffs
Layoffs
Terminations
Terminations
Demotions
Demotions
Retirements
Retirements

Forecasting Demand for

Employees
Quantitative
Quantitative
Methods
Methods

Forecasting
Forecasting Demand
Demand
Qualitative
Qualitative Methods
Methods

Quantitative Approach: Trend Analysis

Forecasting labor demand based on an organizational
index:
Select a business factor, e.g. sales, that best predicts
human resources needs.
Plot the business factor in relation to the number of
employees to determine average labor productivity.
Compute labor productivity for the past five years.
Project human resources demand out to the target
year(s).

Example of Trend Analysis of HR Demand

BUSINESS
FACTOR
YEAR

(SALES IN 000)

LABOR
PRODTY

(SALES/EMPLOYEE)

HR
DEMAND
(NO. OF EMPLOYEES)

1999 Rs. 2,935

8.34

352

2000 Rs. 3,306

10.02

330

2001 Rs. 3,613

11.12

325

2002 Rs. 3,748

11.12

337

2003 Rs. 3,880

12.52

310

2004 Rs. 4,095

12.52

327

2005* Rs. 4,283

12.52

342

2006* Rs. 4,446

12.52

355

*Projected figures

Qualitative Approaches to Demand

Forecasting
Management Forecasts
The opinions (judgments) of supervisors, department
managers, experts, or others knowledgeable about the
organizations future employment needs.
Delphi Technique
An attempt to decrease the subjectivity of forecasts by
soliciting and summarizing the judgments of a
preselected group of individuals.
The final forecast represents a composite group
judgment.

Forecasting Supply of Employees:

Internal Labor Supply
Staffing Tables
Markov Analysis
Skill Inventories
Replacement Charts
Succession Planning

Forecasting Internal Labor Supply

Staffing Tables
Graphic representations of all organizational jobs,
along with the numbers of employees currently
occupying those jobs and future (monthly or yearly)
employment requirements.
Markov Analysis
A method for tracking the pattern of employee
movements through various jobs. Shows the % &
actual no of employees who remain in each job
from one year to the next and also the proportions
of those who are promoted, demoted, transferred or
leave the organization.

Hypothetical Markov Analysis for a

Retail Company

Internal Supply Forecasting Tools

Skill Inventories
Files of personnel education, experience, interests,
skills, etc., that allow managers to quickly match job
openings with employee backgrounds.
Replacement Charts
Listings of current jobholders and persons who are
potential replacements if an opening occurs.
Succession Planning
The process of identifying, developing, and tracking
key individuals for executive positions.

An Executive Replacement Chart

Forecasting Supply of Employees:

External Labor Supply
Factors Influencing the External Labor Supply:
Demographic changes in the population
National and regional economics
Education level of the workforce
Demand for specific employee skills
Population mobility
Governmental policies

Sources of Information About

External Labor Markets
Department of Labor publications
State and local planning and development
agencies
Chambers of Commerce
Industry and trade group publications
State and local employment agencies

Requisites for Successful HRP

HRP must be seen as equally vital as business planning
Top-management support
Periodic review and revision of the forecasting
techniques and the forecasts
Without long range planning concentration becomes
focussed on short-term needs resulting in crisis
management reactions
An excellent and up-to-date HRIS
Active involvement of line managers and co-ordination
between line mgrs and HR function